Online booking bonuses ... going, going, gone

Frequent flyer miles have been routinely used as carrots to alter the behavior of travel consumers. And perhaps never and nowhere has that behavior modification tactic been used more effectively than in the case of online booking. That's why American's decision to pull its online-booking bonus truly marks the end of an era

If airlines had their way, most if not all ticket sales would be made online. And not just anywhere on the Internet, but on the airlines' own websites.

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That's because online sales maximize revenue (airlines set profit-maximizing prices and pay no sales commissions) and minimize costs (no call center overhead, etc.). It also gives airlines the opportunity to upsell (substitute business class for coach, e.g.) and cross-sell (sell a hotel stay and car rental in conjunction with the flight).

While there are no reliable financial data available, I'd estimate the profit impact of moving ticket sales onto an airline's own website to be in the tens of millions of dollars annually. And that's just for a single large carrier.

With so much to gain, rewarding online bookers with frequent flyer miles was well worth the modest cost.

And so, for almost as long as tickets have been sold online, airlines routinely offered 1,000 bonus miles for every online booking, although more recently, the industry standard was 500 bonus miles. (At its high point during 1999, American, Continental, and United were offering 4,000 bonus miles for first-time online bookings.)

So pervasive did the bonuses become that they were taken for granted. They were perceived as permanent program features rather than as limited-time offers, designed to accomplish specific goals.

But the incentives have had their desired effect: Most consumers now book online automatically, with no need for the airlines to provide extra incentives to do so. And so it was only natural that they would be discontinued.

Still, when airlines scaled back the bonuses, and then terminated them altogether, it was a wrenching change for many mile collectors, who had come to take the extra miles for granted.

No doubt there will be more agonizing when American, the last of the large carriers to offer an online booking bonus, ends its bonus—500 miles for round-trips in first or business, 250 for coach—on April 1.

But such grousing is misplaced. Under the circumstances, members of American's AAdvantage program should consider themselves fortunate that the bonus was in place as long as it was.

While booking bonuses will no longer be available from the full-service carriers, they remain in place at ATA and JetBlue. Each still offers double points for flights booked on its website. In both cases, it's hard to imagine their being discontinued, since to do so would seriously degrade the value of participating in either of those programs.

Even so, ATA Travel Awards and JetBlue TrueBlue members should beware the fallacy of assuming that bonus miles are forever. As members of the mainline carriers' schemes now know, the rewards of online booking can be fleeting.

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